Do those knowledgeable in Keynes, accept this characterisation that
Keynes's model proposed an international financial insitutution that would
have placed interest charges on *both* creditors and debtors?

Would that be qualitatively different in its workings?

And would this idealist reform, actually represent a major step towards
socialism - presumably not Keynes's intention?

Chris Burford

London

>To me, the abiding mystery surrounding the World Bank and the IMF is why
>anyone still believes that they are capable of reform. The New Economics
>Foundation concludes its devastating critique of the two bodies by
>suggesting only that they should "undergo democratic overhauls". Even the
>Guardian's usually far-sighted economics editor, Larry Elliott, has argued
>that those who believe the World Bank and IMF are inherently corrupt "are
>not only wrong, but are giving succour to extremists on the right who
>oppose all but minimalist government and despise internationalism". There
>is, most commentators agree, no alternative to the existing global
>financial system.
>>This is not a consensus that John Maynard Keynes would have joined. In
>1944, he warned that a
>financial system which imposed penalties and strictures on debtor nations
>but not creditor nations would ensure that the rich became richer and the
>poor became poorer. He proposed a global financial institution which would
>charge interest on both debt and credit. Creditor nations would thus be
>encouraged to spend their surpluses in debtor nations, automatically
>correcting imbalances in trade.
>>The US proposed an alternative system. Help for debtor nations would be
>confined to a fund and a bank which lent them money when they got into
>trouble. These would both be based in Washington and effectively
>controlled by the creditors. As Keynes foresaw, the US proposal would
>ensure both that debtor nations fell further into debt and that creditors
>- the US in particular - could exercise ever-greater economic and
>political power over them. But the US told Britain that if we didn't
>accept its proposal, we wouldn't get our war loan.
>>The World Bank and the IMF, in other words, were conceived as the
>policemen for a coercive and grossly unbalanced world order. The idea that
>they could deliver anything but disaster for the world's poor is
>laughable. If, as they will claim in Prague, they want to help build a
>fairer world, then they must start by closing themselves down.